Death of the disc: Apple, Spotify and Amazon are taking over video and music distribution
Netflix, Amazon, Google and Apple digital content now makes up 71% of the video market.
UK residents are continuing to embrace music streaming services in favour of digital downloads and physical purchases.
According to new figures from the Entertainment Retailers Association (ERA), streaming services earned a combined £577 million in 2017. This represents a 42% jump on the previous year (£407 million). Physical purchases, while still strong, have now dropped below streaming when it comes to revenue generated.
In 2016, physical purchases of music was around £70m higher than streaming (£475m), but has failed to keep up with streaming's exponential growth. In 2017, physical revenue dropped by 3.4% to £459m.
Digital music downloads suffered a major drop in sales in 2017, around 23%, and now contribute just £165m out of the total £1.2bn in music revenue. The music industry overall in the UK improved sales by about 10%.
Video followed a similar trend with huge growth in the digital section (it is not broken up between streaming and downloads like music). Digital purchases rose by 22%, from £1.56bn to £1.9bn. DVD and Blu-ray purchases suffered in exchange, dropping by 17% from £894m to £742m.
DVD and Blu-ray rentals are the worst performer, across all categories, and contribute just 0.5% to total entertainment revenue. Sales dropped again in 2017 by about £8m, making the total revenue from rentals just £41m.
The only section of entertainment with improved physical purchases was gaming. Hard copy game sales increased by 2% in 2017, from £776m to £792m. Digital downloads rose as well to retain the title of most lucrative entertainment section. Digital game downloads earned £2.56bn, about 12% more than in 2016. A large portion of that is likely generated through mobile gaming.
Total sales from the entertainment section in the UK grew by 9% to £7.24 billion in 2017.
ERA chief executive Kim Bayley said the figures show innovation and technology as the driving force of the market. "In the past, the growth of the market tended to be dependent on the release schedules of games publishers, film studios and record labels," Bayley said. "Now we are seeing a market which is also driven by digital platforms and technologies".
